Mutual of Enumclaw Insurance Company v. Macpherson Construction & Design, Inc., No. 57820-1-I (Wash. App. 7/16/2007)
| Decision Date | 16 July 2007 |
| Docket Number | No. 57820-1-I.,57820-1-I. |
| Court | Washington Court of Appeals |
| Parties | MUTUAL OF ENUMCLAW INSURANCE COMPANY, Appellant, v. MACPHERSON CONSTRUCTION & DESIGN, INC.; MACPHERSON CONSTRUCTION & DESIGN, LLC, Respondent, and THOMAS and ANNE MARIE HEDGES, Defendants. |
Appeal from King County Superior Court. Docket No: 04-2-20363-5. Judgment or order under review. Date filed: 01/09/2006. Judge signing: Honorable Michael C Hayden.
Counsel for Appellant/Cross-Respondent, Brent William Beecher, Hackett Beecher & Hart, 1601 5th Ave Ste 2200, Seattle, WA, 98101-1651.
Counsel for Respondent/Cross-Appellant, Gregory Louis Harper, Harper | Hayes PLLC, 600 University St Ste 2420, Seattle, WA, 98101-1129.
Steven Neil Driggers, American Northwest Retirement Plan Servi, 1010 S 336th St Ste 305, Federal Way, WA, 98003-7355.
Rebecca St Colette Sullivan, Harper | Hayes PLLC, 600 University St Ste 2420, Seattle, WA, 98101-1129.
General contractor MacPherson Construction & Design, LLC, was insured by Mutual of Enumclaw Insurance Company (MoE). MoE filed this action against MacPherson seeking a judgment declaring that MacPherson's insurance policy did not cover a claim asserted against MacPherson by a third party for damages arising out of the faulty workmanship of a subcontractor. The trial court granted partial summary judgment in favor of MoE, ruling that an exclusion in the policy precluded coverage under the policy's general terms. The trial court then granted summary judgment in favor of MacPherson, ruling that a liberalization clause contained in the policy applied because MoE had sought the insurance commissioner's approval of new policy language that would apply to MoE's situation, and that the claim was covered. Both parties appeal.
We affirm the trial court's ruling that an exclusion in the policy applies to preclude coverage for the claim under the policy's general terms. We also hold, however, that neither party has demonstrated that it is entitled to summary judgment regarding the application of the liberalization clause. Accordingly, we reverse the trial court's summary judgment ruling on that issue, and remand this matter to the trial court for proceedings consistent with this opinion.
MacPherson is a developer and general contractor in the business of constructing homes. At all times relevant to this lawsuit, MacPherson was insured by MoE under both a commercial general liability (CGL) policy and a supplemental umbrella policy.1 It is the coverage afforded MacPherson under the umbrella policy that is the subject of this appeal.
In 1999, MacPherson was the general contractor on the construction of a house for Thomas and Anne Marie Hedges. In 2001, the Hedges discovered significant water damage to the structure of the house caused by siding that had been incorrectly installed by one of the subcontractors. The Hedges brought an action in arbitration against MacPherson and the matter proceeded to hearing. The arbitrator awarded the Hedges $399,088.32, an amount representing both damages to the house itself and damages for the loss of a favorable purchase offer on the house that had been made before the water damage was discovered. MoE filed this action against MacPherson in 2004, seeking a judgment declaring that "the Hedges' claims against McPherson, Inc. and MacPherson, LLC are not covered by the Mutual of Enumclaw liability policies" issued to MacPherson.
In January 2005, the trial court granted partial summary judgment in favor of MoE, ruling that, as a result of policy exclusions, MacPherson was not entitled to coverage under the general terms of either the CGL policy or the umbrella policy. The trial court also ruled, however, that there remained an unresolved question of fact as to whether MacPherson was entitled to coverage as a result of a liberalization clause contained in the umbrella policy.2
In July 2005, both parties filed additional motions for summary judgment regarding the issue of coverage pursuant to the liberalization clause. The trial court granted summary judgment in favor of MacPherson, ruling that the policy had been "liberalized" so that it provided coverage for the award amount.
The trial court then entered judgment in favor of MacPherson, awarding MacPherson $399,088.32, the total amount of the arbitration award.
MacPherson also moved for an award of attorney fees and costs in the amount of $165,900.75. The trial court awarded MacPherson $43,447.88 in such fees and costs.
Both parties appeal. MoE contends that the trial court erred by ruling that MacPherson was entitled to coverage pursuant to the umbrella policy's liberalization clause, thereby granting MacPherson's motion for summary judgment and denying MoE's motion for summary judgment on the same issue. MacPherson contends that the trial court erred by ruling that an exclusion in the umbrella policy applied to preclude coverage under the policy's general terms.
We hold that there exist disputed issues of material fact concerning whether the liberalization clause applies to provide coverage to MacPherson for the arbitration award amount. Accordingly, we reverse the trial court's summary judgment ruling in favor of MacPherson on this issue. We also hold that MoE has failed to demonstrate that it is entitled to summary judgment regarding the application of the liberalization clause. Accordingly, we affirm the trial court's denial of summary judgment on this issue. Finally, we affirm the trial court's summary judgment ruling that a policy exclusion precludes coverage for the arbitration award pursuant to the umbrella policy's general terms.
This court reviews de novo an order on summary judgment, and engages in the same inquiry as the trial court, Marincovich v. Tarabochia, 114 Wn.2d 271, 274, 787 P.2d 562 (1990), based solely on the precise record before the trial court. Green v. Normandy Park Riviera Section, Cmty. Club, 137 Wn. App. 665, 678, 151 P.3d 1038 (2007). Summary judgment is properly granted when the pleadings, affidavits, depositions, and admissions on file demonstrate that there is no genuine issue of material fact and that the moving party is entitled to summary judgment as a matter of law. CR 56(c); Hutchins v. 1001 Fourth Ave. Assocs., 116 Wn.2d 217, 220, 802 P.2d 1360 (1991). If, after viewing all of the evidence, reasonable persons could reach only one conclusion, summary judgment is appropriate. Doherty v. Municipality of Metro. Seattle, 83 Wn. App. 464, 468, 921 P.2d 1098 (1996).
Where different inferences can be reasonably drawn from evidentiary facts, however, summary judgment is not warranted. Johnson v. Schafer, 47 Wn. App. 405, 407, 735 P.2d 419 (1987), reversed on other grounds, 110 Wn.2d 546, 756 P.2d 134 (1988). Thus, a motion for summary judgment must be denied if the record shows any reasonable hypothesis which entitles the nonmoving party to relief. Mostrom v. Pettibon, 25 Wn. App. 158, 162, 607 P.2d 864 (1980). The trial court is not permitted to weigh the evidence or resolve any material factual issues in ruling on a motion for summary judgment. Fleming v. Smith, 64 Wn.2d 181, 185, 390 P.2d 990 (1964). Preston v. Duncan, 55 Wn.2d 678, 681, 349 P.2d 605 (1960).
The party moving for summary judgment always has the burden of proving, by uncontroverted facts, that no genuine issue as to any material fact exists, whether or not that party would have the burden of proof on the issue at a trial on the merits. State ex rel. Bond v. State, 62 Wn.2d 487, 490, 383 P.2d 288 (1963). Once the moving party satisfies its initial burden, the burden then shifts to the nonmoving party to show that a triable issue exists. Doherty, 83 Wn. App. at 468. All material evidence and all reasonable inferences therefrom must be construed most favorably to the nonmoving party. Ashcraft v. Wallingford, 17 Wn. App. 853, 854, 565 P.2d 1224 (1977).
MoE appeals the award of summary judgment to MacPherson, contending that the trial court erred by ruling that MacPherson's policy was "liberalized" pursuant to the liberalization clause and, thus, provided coverage for the arbitration award amount. MoE asserts that, as a matter of law, the requirements of the liberalization clause were not satisfied. On the other hand, MacPherson asserts that, as a matter of law, the requirements of the liberalization clause were satisfied.
We disagree with the assertions made by both parties, and hold that neither party has demonstrated that it is entitled to judgment as a matter of law on this issue. Initially, we hold that an issue of material fact exists regarding the application of the liberalization clause, which precludes an award of summary judgment to MacPherson. We further hold that MoE has failed to demonstrate that, as a matter of law, any one requirement of the liberalization clause was not satisfied, which precludes an award of summary judgment to MoE.3
The liberalization clause4 states:
Liberalization Clause. In the event any filing is submitted to the insurance supervisory authorities on behalf of the Company, and:
(a) the filing is approved or accepted by the insurance authorities to be effective while this policy is in force or within 45 days prior to its inception; and
(b) the filing includes insurance forms or other provisions that would extend or broaden this insurance by endorsement or substitution of form, without additional premium;
the benefit of such extended or broadened insurance shall inure to the benefit of the insured as though the endorsement or substitution of form had been made.
(Emphasis added.)
It is undisputed that MoE submitted a filing to the Office of the Insurance Commissioner, an insurance supervisory authority within the...
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